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THE M3: MPEL MASS INITIATIVES; APRIL GGR; MAY DAY STATS

The Macau Metro Monitor, May 3, 2011

 

 

GAINING MASS Inside Asian Gaming

The two latest gaming initiatives at CoD are the 'Red Hot Tables' concept for baccarat players and the 'New Game Zone' for slot players.  As the world's first baccarat trend indicator, Red Hot Tables technology allows incoming players to spot winning streaks at baccarat tables at a distance. MPEL's Co-COO of Gaming Ted Chan explains that this would help new mass market customers find a table they may want to bet at. He added, "It sounds very simple, but unfortunately, nobody in the world is doing it except for us. We are the only ones because we know that is what the customer would like to do." 


The 'New Game Zone' helps players find the latest new electronic gaming machines.  "Setting up the 'New Game Zone' took months of negotiation, and it enables us to leverage the market developments this year, with suppliers having difficulty selling their products in other markets around the world. So now we are just launching that concept with new Aristocrat products, and probably we will be able to work with other suppliers in the future."  MPEL also plans to boost its jackpot appeal by linking the floorwide jackpots at CoD and Mocha Clubs. 

 

Chan says, "I cannot give you a timeline for when mass would be overtaking VIP, but I foresee very positive growth over the next say five years time frame."


MONTHLY GROSS REVENUE FROM GAMES OF FORTUNE IN 2011 AND 2010 DICJ 

Macau April gross gaming revenues hit MOP20.51 BN (HKD19.91 BN, US$2.56 BN), up 44.6% YoY.


ROOM RATES RISE OVER 15% DURING MAY DAY HOLIDAY Macau Daily News

Occupancy rate of some hotels reached 100% before and on Labor Day and then fell back to 80%‐90% the following day.  Room rates were up 15-20% YoY. 3-star/4-star ADR ranged between MOP 2,500 and MOP 3,500.

 

MACAU: 900,000 BORDER CROSSING DURING MAY DAY HOLIDAY Macau Daily News

During the three-day May Day holiday from April 30 to May 2, Macau’s three border checkpoints--Gongbei, Hengqin, and Wanzai--recorded 900,000 times of border crossing, of which 420,000 were mainland visitors.  Travelers crossing via the Gongbei border totaled over 840,000, up 10% compared with the same period last year. The figures at Hengqin and Wanzai exceeded 42,000 and 16,000 respectively.


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP - May 3, 2011

 

While it’s proactively predictable to see Geithner politic his way around our “reported” fiscal position, even for him this is impressive.  The Republicans were allegedly waiting until mid-May to put the Democrats feet to the fire on the debt ceiling debate. The US Currency Crash is starting to price this in.  As we look at today’s set up for the S&P 500, the range is 33 points or -1.27% downside to 1344 and 1.16% upside to 1377.

 

SECTOR AND GLOBAL PERFORMANCE

 

The Financials remain the only sector broken on both TRADE and TREND.    

 

THE HEDGEYE DAILY OUTLOOK - daily sector view

 

THE HEDGEYE DAILY OUTLOOK - BEST PERFORMING GLOBAL

 

THE HEDGEYE DAILY OUTLOOK - WORST PERFORMING GLOBAL

 

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: -511 (-1428)  
  • VOLUME: NYSE 935.18 (-4.11%)
  • VIX:  15.99 +8.41% YTD PERFORMANCE: -9.92%
  • SPX PUT/CALL RATIO: 1.38 from 1.75 (-21.37%)

 

CREDIT/ECONOMIC MARKET LOOK:

  • TED SPREAD: 23.75 -0.507 (-2.090%)
  • 3-MONTH T-BILL YIELD: 0.05% +0.01%
  • 10-Year: 3.31 from 3.32
  • YIELD CURVE: 2.70 from 2.71 

 

MACRO DATA POINTS:

  • 8:30 a.m.: Fed’s Hoenig speaks to bankers in Washington
  • 10 a.m.: Factory orders, est. 2.0%, prior (-0.1%)
  • 11:30 a.m.: U.S. to sell $24b 52-wk bills, $28b 4-wk bills
  • 4 p.m.: Treasury’s Geithner at U.S.-China Business Council
  • 4:30 p.m.: API inventories

WHAT TO WATCH:

  • Renren, China’s biggest social-networking website by page views, aims to raise as much as $743.4m in U.S. IPO
  • Greek Finance Minister Says Debt Restructure ‘Huge Mistake’ - Finance Minister George Papaconstantinou said a restructuring of Greece’s debt, causing losses for bondholders, would lock the country out of markets for a decade or more.
  • Canada’s dollar rose, stocks and bonds may rally after Conservative Prime Minister Stephen Harper won a majority government for first time.
  • Goldman Sachs Lloyd Blankfein likely to remain CEO for at least two years - NY Post
  • US steel companies using price escalator clauses in longer-term contracts - WSJ

COMMODITY/GROWTH EXPECTATION

 

THE HEDGEYE DAILY OUTLOOK - daily commodity view

 

COMMODITY HEADLINES FROM BLOOMBERG:

  • Gold, Silver Advance as Signs of Inflation Spur Increased Investor Demand
  • Oil Drops on Economic Growth Concern as Bin Laden Death Boosts Volatility
  • Copper in London Declines for Fourth Day on China, U.S. Manufacturing Data
  • Soybeans Drop For a Second Day as Favorable Weather May Aid U.S. Planting
  • Sugar Falls to Seven-Month Low on Thai Production; Cocoa Prices Decline
  • S. Korea to Boost Tarriff-Free Pork Imports After Foot-and-Mouth Outbreak
  • Dodd-Frank Rules on Swaps and Ratings Targeted by U.S. House Republicans
  • Rail Access to Australia’s Fremantle Port Is Cut After Accident, ABC Says
  • Palm Oil Advances as Gain in Malaysian Exports May Curb Inventory Build-up

 

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - daily currency view

 

 

EUROPEAN MARKETS

  • European equity markets opened mixed before drifting lower in choppy trading.
  • UK Apr Manufacturing PMI 54.6 vs consensus 56.9; now at a 7 month low
  • EuroZone Mar PPI +6.7% y/y vs consensus +6.6% and prior +6.6%; EuroZone Mar PPI +0.7% m/m vs consensus +0.6% and prior +0.8%

THE HEDGEYE DAILY OUTLOOK - BEST PERFORMING EURO

 

THE HEDGEYE DAILY OUTLOOK - WORST PERFORMING EURO

 

 

ASIA-PACIFIC MARKETS

  • Australia keeps main cash rate unchanged at 4.75%
  • India’s  central bank raised benchmark interest rates by a more-than-estimated 0.5 percentage point after forecasting inflation will stay at an “elevated level” until at least September - Bloomberg.
  • China Home Prices Rise; Wen ‘Determined’ to Lower Them - Bloomberg
  • Japan was closed for Constitution Day and will remain closed until 6-May.

THE HEDGEYE DAILY OUTLOOK - BEST PERFORMING ASIA

 

THE HEDGEYE DAILY OUTLOOK - WORST PERFORMING ASIA

 

 

MIDDLE EAST

 

THE HEDGEYE DAILY OUTLOOK - MIDEAST PERFORMANCE

 

 

Howard Penney

Managing Director



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Crystal Clear

This note was originally published at 8am on April 28, 2011. INVESTOR and RISK MANAGER SUBSCRIBERS have access to the EARLY LOOK (published by 8am every trading day) and PORTFOLIO IDEAS in real-time.

“It’s not clear that we can get substantial improvements in payrolls without some additional inflation risk.”

-Ben Bernanke, April 27, 2011

 

We’re all for transparency in what it is that we do. The problem with Ben Bernanke’s definition of transparency is that it’s not clear that he knows what he is doing. His forecasts are routinely late and/or wrong, and his decision making process depends heavily on those forecasts.

 

Our Q2 Macro Theme that The Bernank will remain “Indefinitely Dovish” is a forecast. So is our call that the probability of a US Currency Crash continues to heighten. Ben Bernanke did nothing but confirm those forecasts yesterday:

  1. He raised his inflation forecasts
  2. He cut his US GDP growth forecasts
  3. He Burned The Buck

While many critical factors are “not clear” to the Central Planner-in-Chief of globally interconnected markets, the prices that are marked-to-market real-time remain Crystal Clear.

 

Of the Big 3 that I made a call on in yesterday’s Early Look, I had 1 out of 3 wrong:

  1. Long Gold – hitting an all-time high intraday yesterday and again this morning (all-time is a long time), the price of Gold is now in line with the SP500’s YTD return of +7.8% YTD.
  2. Long Oil – rallying immediately as the US Dollar crashed to fresh YTD lows yesterday, the price of West Texas Crude Oil is now up +23.7% for 2011 YTD, outperforming both the SP500 and Gold by a factor of 3:1.
  3. Short SP500 – rallying on low-volume to a fresh YTD high of 1355, the SP500 is up 50 points (+3.8%) in a almost a straight line in the last 7 trading days into a government presser. I think The Bernank calls this “price stability.” We call it the market Gaming Policy.

While my biggest position remains long International Currencies (we have a 30% Global Macro allocation in the Hedgeye Asset Allocation Model to FX), what a lot of people want to talk to me about isn’t the raging bull market in currencies other than our own – it’s usually “what gets you to cover and buy the SP500.”

 

I get why that is. I think it’s fair. I am accountable to all of the current 26 positions in the Hedgeye Portfolio, particularly those that I have wrong. As Seth Klarman appropriately said earlier this year, “focusing on what you can lose versus what you can earn sets you apart.”

 

So, other than our “free” market’s ability to function without the heavy hand of a Central Planner holding pressers, where am I losing? Here are the updated returns in the Hedgeye Portfolio of the Big 3 aforementioned positions:

  1. Gold = +8.37%
  2. Oil = +5.37%
  3. SP500 = -2.46%

Just like that old nursery rhyme on Romper Room – one of these things is not like the others; one of these things just doesn’t belong… being short the SP500 right here and now is obviously wrong. The score doesn’t lie; people do.

 

Back to the Dollar…

 

While The Bernank’s comments addressing a Crashing US Currency were “not clear” yesterday, the world currency market’s vote was Crystal Clear:

  1. On The Day – the US Dollar lost another -0.5% (that used to be a lot for a day in the world’s reserve currency) to make a fresh YTD low.
  2. On The Week – the US Dollar is down another -1.3% (down for the 14th week out of the last 18 and down -9.8% since January).
  3. On The 28 Months – since Obama and Groupthink Geithner took their seats, the USD is down -17% (300bps away from crashing).

Now please don’t call me a Republican for putting Obama’s name beside the score. I was at least as bearish on Bush and his US Dollar Devaluation policy to inflate as I am on this administration’s grasp of Global Macro markets and how they are interconnected.

 

Interconnected?

 

Yes, correlated – which, suspiciously, was a word that The Bernank didn’t use once in his prepared FOMC statement or presser yesterday.

 

How the world’s Central Planner-in-Chief can use the word “hope” multiple times and not address the most obvious risk that a US Currency Crash imposes on global markets is beyond me. The Audacity of Hope is clearly not a risk management process, so here’s the correlation math:

  1. USD to Oil = -0.92
  2. USD to Gold = -0.92
  3. USD to CRB Index = -0.87

*Note to Timmy and The Bernank: these are what we call the inverse correlations of the US Dollar to Oil, Gold, and the 19 Commodity Component CRB Index on what we call our intermediate-term TREND duration (3 months). These are at all-time highs.

 

The alternative risk management strategy to dismissing either causality and/or correlation risk (the global median inflation rate has been making higher-highs for the last 40 years, effectively since Nixon abandoned the Gold Standard in favor of the Fiat Fool Policy Standard), is to simply believe. Yes, we can all go there – I took my family to see Shamu’s “Believe” in Orlando last week – it was magical.

 

According to Big Broker yesterday (The Banker of America Merrill Lyncher North American Economics Strategist – Ethan Harris) what the Almighty Cental Planner of US Dollar Destruction was doing with this presser thing yesterday was, “teaching the American public about how monetary policy works…” (Bloomberg article by Craig Torres and Josh Zumbrun)

 

Thanks for the transparency. Thanks for the teachings. I may as well gloss over all of world history’s lessons on Currency Crashes now and go back to buying-the-damn-dips in US stocks alongside a stuffed dolphin at Seaworld.

 

My immediate-term support and resistance lines for Gold are now 1499 and 1534 (Gold is immediate-term overbought). My immediate-term support and resistance lines for Oil are now $110.59 and $114.68 (buy more). My immediate-term support and resistance lines for the SP500 are now 1328 and 1360 (I’ll stay short, for now).

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Crystal Clear - Chart of the Day

 

Crystal Clear - Virtual Portfolio



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The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

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